The following is a brief history of the American Club from its foundation in February 1917 to the present day.

Beginnings

The American Club was originally formed as a consequence of legislation passed in the United Kingdom at the height of World War I.

In 1916 the British Parliament passed the Trading with the Enemy Act which imposed economic sanctions on Germany and extended them to neutral vessels. At that time, the majority of internationally-trading US flag vessels were insured by British P&I clubs. This meant that the British clubs involved in the P&I insurance of the American fleet came to be severely constrained in the extent of cover they were able to provide to US shipowners who effectively found themselves, as a result, deprived of the protection they had hitherto been afforded.

Accordingly, and in response to these developments, Johnson and Higgins, the leading US marine insurance brokerage and average adjusting house of its era, received approaches from a number of American shipowners to see whether they could organize and manage an American Club whose business would be conducted in a manner similar to the mutual operations of the British and Scandinavian clubs.

In January 1917, Johnson and Higgins sent a letter to all American shipowners asking whether they were interested in becoming members of an American P&I club. The response was favorable. So, on February 14, 1917, the American Club was formally incorporated following the enactment of enabling legislation by the State of New York.

There were 35 original shipowner members admitted as of February 20, 1917 – the first Board meeting of the Club having occurred only three days prior to the February 20 renewal date. However, by the end of the war, there were more than 4000 ocean-going ships entered, the United States Shipping Board having committed its vessels to the Club in the interim.

The early Rules and general terms of entry in the American Club were framed much in line with those of the London Club in which a significant volume of US tonnage had traditionally been entered during the early part of the 20th century. Indeed, the London Club reinsured the American Club on a quota-share basis for the first seven years of its existence.

At the time of its establishment, Johnson and Higgins were given a contract to manage the American Club for ten years. At the end of that period – in 1927 – Johnson and Higgins formed Shipowners Claims Bureau, Inc. as a wholly-owned subsidiary to manage the Club in a manner which could be kept separate from the core insurance broking activities of the parent. Shipowners Claims Bureau, Inc. has managed the American Club ever since.

The Middle Years – the vicissitudes of commerce, World War II and the lead-up to the current era.

As a consequence of heavy competition from the British clubs, tonnage entered in the American Club began to diminish during the 1920’s and 1930’s. Indeed, the formation of Shipowners Claims Bureau, Inc. as the management company for the Club had been motivated by Johnson and Higgins’ desire to persuade other American brokers to do business with it.

However, despite these challenges, the American Club’s entry stabilized over time until it faced the greatest geopolitical upheaval of the century, being the outbreak of World War II.

As a result of actions taken by the US government during the war years, the American Club had little mutual business since most US ships were time-chartered to the War Shipping Administration and insured under a government-sponsored scheme where the Club was a quota-share participant with three other insurance companies. At that time the traditional Rule Book format for the evidencing of insurance terms gave way to a standardized policy similar to the “SP23” form.

The twenty-five years which followed the end of World War II featured a period of profound conservatism in the manner of which the American Club pursued its business. For example, it did not accept any direct business and would only quote to US brokers. However, because of the connection between the management company and Johnson and Higgins, most other brokers kept their business away from the Club. This created circumstances where Johnson & Higgins became virtually the sole producer of business which, perhaps unsurprisingly, did not much expand over the relevant period.

The 1970’s and early 1980’s were a period of mixed fortunes for the Club. Indeed, in 1971, it almost stopped underwriting. However, a decision was made to continue.

Over this period – the American Club not being at this point, nor ever having been, a member of the International Group – reinsurance for its largest claims was placed exclusively at Lloyd’s. However, since this reinsurance did not extend to tanker pollution liabilities, entered vessels of this type were insured in parallel for such liabilities in the International Tanker Indemnity Association (ITIA) until it itself ceased underwriting in the late 1990’s.

The 1970’s also saw the placement of tank vessels in the Alaskan North Slope trade (notably Atlantic Richfield and Sohio, as they then were) while the extinction of the Lakes Pool in the late 1970’s saw the entry of most Great Lakes fleets in the Club as from that time.

The Club’s involvement in the US tug and barge community also began in the late 1970’s, while its first overseas member – Netumar Lines of Brazil – joined in 1981.

By the late 1980’s, however, and particularly in light of the fierce competition mounted by International Group clubs during the 1987 renewal, it had become clear that – at least if only to provide competitive reinsurance – the American Club required to become a member of the International Group.

This was achieved as of February 20, 1989 when the Club became a party to the International Group Agreement (permission to sign which having previously been obtained from the US Department of Justice) and a reinsured participant in International Group pooling through the London Club.

The Current Era – Vision 2000 and beyond

By the early 1990’s, consolidation in the US tug and barge sector, the continuing decline of US-flag ocean-going tonnage and the unpopularity of the International Group’s US tanker voyage surcharge system, had caused the Club’s tonnage to reduce substantially and made it clear that fundamental change was necessary for the future.

Accordingly, with the help of Mercer Management Consulting, a strategic planning initiative was conducted which resulted in a new business direction being announced – Vision 2000.

The strategy entailed growth and diversification of the Club’s tonnage so as to enable it to compete on equal terms with its competitors elsewhere in the International Group. The initiative also involved the convergence of American Club practices to those elsewhere in the international markets – for example, by reestablishing a Certificate of Entry and Rule Book format for the evidencing of cover – making its forms and procedures identifiably similar to those in international use.

Another important part of the strategy was to gain direct participation in the International Group’s pooling scheme – and not by way of reinsurance – so as to maximize the cost benefits available to the Club through such access. This was achieved as of February 20, 1998, since when the American Club has played a full and constructive part in the affairs of the Group.

On the management front, Marsh and McLennan acquired Johnson and Higgins in early 1997 and Shipowners Claims Bureau, Inc. therefore became part of the larger insurance broking group. However, as of January 1, 2002, Shipowners Claims Bureau, Inc. was demerged from Marsh and became entirely independent – its ownership being held by members of the management team.

In service terms, the human resources available at Shipowners Claims Bureau, Inc. grew significantly as the new millennium began. A London office was opened in late 1998 enabling the Club to work more closely with local brokers who had come to dominate the P&I market. Also, in recognition of the Club’s significant membership from the eastern Mediterranean, notably Greece, a Piraeus office was opened in May, 2005. A Shanghai office to service the needs of Members in the PRC and elsewhere in the Asian region was opened in November, 2007. This was followed by the opening of a Hong Kong office in mid-2013. An office in Houston, Texas was opened in July, 2016 to extend the Club’s service capabilities into the US Gulf and its contiguous regions.

Over the period since 1995 when it began to grow and internationalize its business under the Vision 2000 initiative to early 2015, the Club has grown from about 3 million gt by way of total entry to some 15 million gt. Concomitantly, its gross premium income has grown about five-fold during the period from about $20 million in 1995 to an annualized figure as of mid-2013 of approximately $195 million.

In terms of its diversity, the Club has changed from an overwhelmingly US-based membership to one which now embraces shipowners and charterers from every part of the world. Some 50% of all entries are derived from Europe, 12% from the United States, 35% from Asia and the balance from elsewhere, mainly Latin America and the Middle East.

The American Club also operates a fixed premium P&I and FD&D facility called Eagle Ocean Marine. It provides attentive, competitively priced cover to the operators of smaller vessels who prefer a fixed premium approach to their P&I needs. Backed by the American Club in conjunction with underwriters at Lloyd’s, Eagle Ocean Marine offers gold standard International Group club service underpinned by the impeccable security of reinsurance at Lloyd’s.

In addition, through a foundational investment it made in 2016, the American Club has developed a presence in the hull and machinery market, an area highly germane to its activity in the P&I sector. This was accomplished in the form of American Hellenic Hull Insurance Company, Ltd., domiciled in Cyprus. Fully capitalized and accredited under the Solvency II regime of the European Union, American Hellenic Hull represents a new force of growing energy within the marine insurance markets across the world.

Further details as to the current status of the Club can be obtained from the homepage of this website but it is hoped that, at least in outline, the foregoing provides some interesting background to the development of the American Club over the years which, in its various iterations, provide a solid background of tradition for its further success in the future.